Miniratna company posted muted performance in Q2, 45% dividend declared

Market


With a market valuation of 8,811.87 Cr, Rites Ltd is a mid-size Miniratna CPSE company that operates in the industrial sector. In India, RITES is a big player in the engineering and transportation consultancy fields. The firm is the sole export division of Indian Railways that provides rolling stock. The company’s 48-year successful track record includes more than 55 nations on the continents of Asia, Africa, Latin America, South America, and the Middle East. The company has announced its Q2 earnings as well as a 45% interim dividend.

The company has said in a stock exchange filing that “The Board of Directors have declared second interim dividend for the Financial Year 2022- 23 at the rate of 4.5 per share (45% of paid-up share capital) of the company. Further, as intimated earlier vide our letter no. RITES/SECY/NSE, dated 03.11.2022, the record date set for the purpose of payment of second interim dividend for Financial Year 2022-23 is November 18, 2022.”

The company declared net sales of 659 Cr on a consolidated basis in Q2FY23 compared to 766 Cr in Q2FY22, representing a YoY fall of 13.9%, on a standalone basis the net sales fell by 15.1% from 744 Cr in the year-ago quarter to 632 Cr posted in the quarter ended September 2022. On a consolidated basis, EBITDA has fallen by 20% from 226 Cr in Q2FY22 to 181 Cr in Q2FY23 whereas on a standalone basis the EBITDA has fallen by 24.20% from 208 Cr in Q2FY22 to 158 Cr posted in Q2FY23. On a consolidated basis, the company declared a net profit of 140 Cr in Q2FY23 compared to 174 Cr in Q2FY22, representing a YoY fall of 19.60% and on a standalone basis the company declared a net profit of 131 Cr in Q2FY23 compared to 163 Cr in Q2FY22, representing a YoY fall of 19.50%.

Mr. Arafat Saiyed – Senior Research Analyst at Reliance Securities said “RITES reported a subdued performance in 2QFY23. Revenue decrease by 13% YoY (up 9% QoQ) to Rs6.6bn, lower than our estimates of Rs8.9bn, due to sharp decline in exports revenue at Rs788mn, down 77% YoY. While revenue of domestic consultancy segment increased by 16% YoY to Rs2.8bn, its revenue of domestic leasing increased by 9% YoY to Rs355mn. Notably, its revenue from domestic turnkey segment increased by 117% YoY to Rs2.4bn. EBITDA decreased by 16% YoY to Rs1.8bn, (our estimate of Rs2.6bn) while EBITDA margin was down 108 bps YoY to 27.5% (our estimates of 29%). PAT came in at Rs1.4bn (our estimates of Rs2.1bn) down 20% YoY and 3% QoQ.”

“RITES delivered muted subdued performance in 2QFY23 due to lower export revenue with lower margin. RITES is a direct beneficiary of India’s improving railway infrastructure story. Its presence across the transport infrastructure space, from pre-commissioning to execution capabilities across different geographies and segments. We have a BUY rating on the stock,” said Mr. Arafat Saiyed.

The shares of RITES Ltd closed on Friday at 367.60 apiece, down by 3.40% from the previous close of 380.55. On a YTD basis, the stock has gained 35.37% so far in 2022.

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